Australia’s oldest newspaper company Fairfax Media has been swallowed up by the national television network, Nine Entertainment, in a shock merger that spells the end of the 177-year-old legacy media name.

The combined media company will rival Rupert Murdoch’s News Corp Australia for size and advertising clout with its combined assets of a free-to-air TV network, radio stations, news websites, metropolitan and regional newspapers, catch-up TV, a streaming service in Stan and a successful real estate portal in Domain.

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The takeover will deliver a reported annual savings of $50m, and job losses are expected in backroom areas of Fairfax such as human resources and finance.

Observers have been quick to point out that Fairfax’s strong history of public interest journalism will be a strange bedfellow with Nine’s more tabloid style of foot-in-door journalism exemplified by A Current Affair and 60 Minutes, although Fairfax’s websites, including smh.com.au, have been moving towards a more populist style of journalism for some years.

Nine will take a controlling 51.1% share in the new business with Fairfax taking the rest. The combined entity will take the name of Nine’s parent company, Nine Entertainment Co, or NEC and the Fairfax brand will disappear.

Nine, which is being advised by Jefferies Group, and Fairfax, which is being advised by Macquarie Capital, pulled off a coup by keeping the deal secret until it was revealed on Thursday morning.

Hywood was unsentimental about the end of the Fairfax name and said the important thing was that the mastheads remain open and the business survives.

Hugh Marks of Nine will be the new chief executive and Peter Costello, the Nine chairman, will now lead the board of the new business.

But journalists at the venerable mastheads expressed their shock and disappointment at the merger and said they were not confident their editorial independence was assured.

Marks said the new board had agreed to sign the Fairfax charter of editorial independence and said he had no plans to combine the newsrooms of Nine and the newspapers. He said there were no plans to close the regional newspapers in the Fairfax stable or to move the companies under one roof.

But it was clear from the analyst briefing that the attractive assets at Fairfax were Stan and Domain rather than the journalism. Marks admitted as much when pressed but said only a “business model that is viable will allow us to continue to invest in content”.

Staff at Fairfax in Pyrmont and the Age in Spencer Street Melbourne were addressed by Hywood late Thursday afternoon.

A clearly agitated Hywood told staff he had agreed to the merger when approached by Nine in early July because it provided a “more robust model for our journalism”.

Staff at Fairfax in Pyrmont and the Age in Spencer Street Melbourne were addressed by Fairfax chief executive Greg Hywood late Thursday afternoon. Photograph: Scott Barbour/Getty Images

He made jokes but he also scolded staff who he believed were sniggering when he talked about very strong quality of journalism at Channel Nine.

“The shoe is on the other foot,’ he said. “I am announcing my redundancy for a change.”

He said there were new opportunities in a larger organisation and repeated Marks’ assurances that the newsrooms would not be merged.

Hywood and Marks said the merger was an excellent marriage because both Fairfax and Nine had a history of high quality journalism.

“This is a position that we have worked towards for a long time,” Hywood told staff at the Age.

“We publicly supported media law changes because we believe in a competitive environment.

“The cash that’s generated is going to absolutely go through the roof. It’s a business that has virtually no debt to speak of. It’s a business that can deliver enormous rewards for people. The end result is a lot better for this business and it’s a lot better for you. I wouldn’t have supported it otherwise. OK? You know?

“I’m a bit scratchy and probably my mood’s a bit scratchy too. So I apologise for that. I thank everyone for what they have done and put up with over the course of the last few years. It has been pretty confronting times.”

But journalists were not convinced. Kate McClymont, the Sydney Morning Herald’s top investigative reporter, said staff were “shellshocked”.

“It is a great disappointment and it’s very sad,” she said. “The big concern for us as journalists at Fairfax is that [the company] has been around since 1831 and we’re proud of our independence. Our concern is will this be maintained? What is going to happen when the two companies merge?

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“In some ways it’s disappointing to know that really our sole attraction was Stan and Domain, not our journalism.

“Having said that, it’s a media company we’re merging with and as long as we can be assured [our] journalism will remain unchanged and things such as advertising won’t be affecting the stories we cover, then I think we’ll just have to see if we can make the best of it.”

Media buyers welcomed the move and said the new company would have a huge buying potential with the combined audience data of the two companies.

“As an industry we rallied for changes to media laws and for reform so we weren’t hamstrung by archaic media regulations,” Lewis told Guardian Australia. “It’s what the industry wanted, although people at Fairfax have said it was a surprise to them.”

Lewis said she was not surprised they were retiring the Fairfax brand. “If you look at it from a consumer perspective it’s relatively irrelevant. The consumer is interacting with the brand which is Domain or the Age or the SMH.

The industry body for advertisers also welcomed the merger but the screen industry warned that the move could result in less media diversity.

“Assuming the deal receives regulatory and shareholder approval, the new company will have an opportunity to provide advertisers with access to quality, segmented audiences on a mass scale,” the Australian Association of National Advertisers said.

“Any consolidation of media ownership should not reduce the diversity of Australian content on Australian screens,” Screen Producers Australia said.

It’s the first major consolidation in the media sector since the federal government dropped its two-out-of-three rule last year.

Under the terms of the proposed transaction, Fairfax shareholders will receive 0.3627 Nine shares for each Fairfax share held and $0.025 cash.It represents a 21.9% premium to Fairfax’s closing share price of 77c on Wednesday.